CHART: London's Housing Market Has Gotten Ridiculously Unaffordable

Home price growth is typically more pronounced in metropolitan areas than elsewhere because they typically attract above-average GDP and income. And home price affordability will vary greatly across metros around the world.

A common way to measure home price affordability is to measure home prices against income.

"House price to income ratios for London vary depending on the price source but in any case are about 30%-40% higher than the UK national average," according to Fitch. "Both London and the U.K. are above their own averages for the last 16 years."

Fitch believes the disconnect from incomes in London will further widen over the next two years due to reinvigorated consumer confidence, mortgage availability, high-LTV lending, and continuing demand from foreign cash buyers."

Prices in New York and San Francisco for instance are also a good deal higher than the average for the U.S. but are still lower than London.